The S&P 500 Index posted solid overall gains with mostly positive sector performance. At the start of the quarter, oil prices rose and corporate profits declined. Markets gained steadily through the first two months of the quarter, but stocks plunged late in the period after the United Kingdom's vote to exit the European Union (Brexit) surprised Wall Street. However, stocks recovered some of their losses over the last three days of the trading period.
The Growth & Income Fund returned 3.57% in the quarter compared with 2.46% for the S&P 500 Index and 2.14% for the Lipper Large-Cap Core Funds Index. For the 12 months ended June 30, 2016, the fund returned 6.93% versus 3.99% for the S&P 500 Index and 1.52% for the Lipper Large-Cap Core Funds Index. The fund's average annual total returns were 6.93%, 11.93%, and 7.63% for the 1-, 5-, and 10-year periods, respectively, as of June 30, 2016. The fund's expense ratio was 0.67% as of its fiscal year ended December 31, 2015.
For up-to-date standardized total returns, including the most recent month-end performance, please click on the Performance tab, above.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary and you may have a gain or loss when you sell your shares.
While financials remains a large position, we continue to limit our exposure to interest rate-sensitive companies because we believe any case for interest rate rises are increasingly uncertain given the Brexit aftermath. Information technology remains our largest underweight versus the benchmark as we continue to think the sector is bifurcated with high multiples for companies that are rapidly growing and lower multiples for companies that face secular challenges. We also remain underweight in the consumer discretionary sector because we believe many brick-and-mortar retailers face significant challenges from online retailers and that traditional media companies are weighed down by declining advertising revenue.
Overall, we expect periods of volatility and risk aversion to persist in the near term, driven by uncertainty from the UK's decision to leave the European Union, the presidential election in the U.S., the effects of slowing growth in China, and currency movements. We have taken a more defensive position in recent months, and we expect to remain defensively positioned in the near term. Going forward, stock selection is likely to be the primary driver of the portfolio's long-term performance.